The country’s largest lender State Bank of India (SBI) and the largest insurance company Life Insurance Corporation (LIC) are looking to
launch Islamic products, senior officials at the two firms said.
While SBI officials have been meeting top experts in the field over the past few days, LIC has set up a team looking into such products. However, a Reserve Bank of India study has recently concluded that Islamic banking may not be feasible in the current regulatory framework in the country.
LIC chairman TS Vijayan told ET that the corporation had put in place a team to look at Takaful, the insurance equivalent of Shariah-compliant Islamic banking. The state-run insurer’s representative office in Singapore is to serve as a base for catering to Malaysian and Indonesian market.
“We have put a team to study Takaful products. We are looking at this product for our Saudi operations where Takaful is coming up,” said Mr Vijayan.
However, things at SBI are still in the preliminary stages. “We have been studying the feasibility of launching Islamic banking in terms of the products that can be offered and the systems that need to be put in place,” said SBI deputy general manager, overseas expansion and planning, Naresh Malhotra. He, along with other officials at the International Business Group, met several experts to study the legal and regulatory hindrances towards launching Shariah-compliant products.
SBI is only the latest entrant in the growing list of firms seeking to tap the investment habits of close to 142 million Muslims in the country. Over the the past few months, two mutual fund schemes have been launched which claim to operate on a Shariah-compliant basis. Two insurance companies, too, have joined the bandwagon by launching special pension fund schemes. The Kerala government recently announced plans to set up a Shariah-compliant NBFC, capitalised at Rs 1,000 crore.
“Islamic banking could be introduced by effecting changes through notifications of RBI and without a change in law,” said Mohammed Hussain Khatkhatay, noted expert on Islamic banking. He concedes this will require strong political will from the government, which may be difficult to bring about.
A working group was recently constituted by RBI under the chairmanship of Anand Sinha, an executive director.It concluded that Shariah-complaiant instruments are not feasible in the current regulatory framework.
Link: http://economictimes.indiatimes.com/news/news-by-industry/banking/-finance-/banking/SBI-LIC-plan-Islamic-products/articleshow/5104174.cms
While SBI officials have been meeting top experts in the field over the past few days, LIC has set up a team looking into such products. However, a Reserve Bank of India study has recently concluded that Islamic banking may not be feasible in the current regulatory framework in the country.
LIC chairman TS Vijayan told ET that the corporation had put in place a team to look at Takaful, the insurance equivalent of Shariah-compliant Islamic banking. The state-run insurer’s representative office in Singapore is to serve as a base for catering to Malaysian and Indonesian market.
“We have put a team to study Takaful products. We are looking at this product for our Saudi operations where Takaful is coming up,” said Mr Vijayan.
However, things at SBI are still in the preliminary stages. “We have been studying the feasibility of launching Islamic banking in terms of the products that can be offered and the systems that need to be put in place,” said SBI deputy general manager, overseas expansion and planning, Naresh Malhotra. He, along with other officials at the International Business Group, met several experts to study the legal and regulatory hindrances towards launching Shariah-compliant products.
SBI is only the latest entrant in the growing list of firms seeking to tap the investment habits of close to 142 million Muslims in the country. Over the the past few months, two mutual fund schemes have been launched which claim to operate on a Shariah-compliant basis. Two insurance companies, too, have joined the bandwagon by launching special pension fund schemes. The Kerala government recently announced plans to set up a Shariah-compliant NBFC, capitalised at Rs 1,000 crore.
“Islamic banking could be introduced by effecting changes through notifications of RBI and without a change in law,” said Mohammed Hussain Khatkhatay, noted expert on Islamic banking. He concedes this will require strong political will from the government, which may be difficult to bring about.
A working group was recently constituted by RBI under the chairmanship of Anand Sinha, an executive director.It concluded that Shariah-complaiant instruments are not feasible in the current regulatory framework.
Link: http://economictimes.indiatimes.com/news/news-by-industry/banking/-finance-/banking/SBI-LIC-plan-Islamic-products/articleshow/5104174.cms
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